In the national debate about economic policy, the central element remains the role of the Bush administration's tax cuts in generating jobs and growth. The administration is suggesting that the economy has been mightily helped by the tax cuts, that the economy is doing swell, and that the future is rosy. Oh, yeah, the administration concedes, there have been some tough times, but that's only because we've been through so much: September 11, the Iraq War, corporate scandals, and the stock bubble bursting.

None of this rosy-scenario storytelling is surprising. After all, Ronald Reagan ran for re-election on "morning in America," and Bill Clinton sought a second term with an optimistic "everything's getting better" message. Of course, there was plenty of evidence in 1984 that dawn was nowhere in sight: Since 1980, incomes had fallen, poverty and unemployment were up, and very few people were better off than they had been four years earlier. And, to be fair, Clinton's 1996 claim that the economy was creating nothing but good jobs wasn't true, either: Though there was strong, broad-based wage growth in the second Clinton term and an improved quality of jobs, this was not the case during the first term.

What have caught me off guard, I must admit, are the clever -- some might even say deceitful -- ways the Bush administration and its supporters argue that the current economy is great.

But before investigating some of its outrageous claims about the economy, let's do a quick reality check. Where are we? The economy went into recession as George W. Bush took office, so it would be unfair and inaccurate to blame the initial downturn on the current administration. The Bush policies, however, have been flawed because they were never intended to generate jobs or growth in the short-term; they were always about cutting government revenue and shifting the tax burden away from income from investments (from the few) and onto income from labor (that's most of us). A decent set of policies -- enacting one-time tax cuts aimed at lower- and middle-income families, building roads and bridges, renovating schools, providing aid to the states, offering improved unemployment insurance -- could have yielded a much better situation today.

What did happen? There were continuous and record-breaking employment losses for roughly two and a half years, followed by some modest job gains starting last September. Oh, there was one very good month for job growth, this last March. After three years, though, the economy has lost 2.6 million private-sector jobs and created about 600,000 government jobs for a net loss of 2 million. In every other business cycle since the 1930s, the economy had recouped all the lost jobs by three years from the start of the recession. In the current case, however, the economy is still suffering a 1.5-percent loss of employment after three years. In the better-managed cycles of the last three decades, the economy had gained 2.5 percent more jobs after three years. That 4-percent difference between the current cycle and recent cycles represents a shortfall of more than 5 million jobs. So, we've certainly had a tough time on the job front.

What's more, inflation-adjusted wages are flat, at best, and are eroding for many workers. When jobs are short, it is inevitable that weekly and hourly wages grow more slowly as employers take advantage of the situation. The offshoring of white-collar jobs has only added to these pressures this time around.

Poor job performance and wage stagnation add up to very little growth in overall wage and salary income -- what most of us live on. With fast productivity and minimal growth in wages and employment, you get big profits. This is exactly whats occurred. Even Alan Greenspan noted this recently, saying: "Most of the recent increases in productivity have been reflected in a sharp rise in the pre-tax profits of nonfinancial corporation … . The increase in real hourly compensation was quite modest over that period. The consequence was a marked fall in the ratio of employee compensation to gross nonfinancial corporate income to a very low level by the standards of the past three decades."

So, how do an administration and its friends tiptoe through these tulips? Very selectively.

Consider this point in a new ad widely distributed on the Internet, titled "Working to Keep America Working," which hypes the Bush administration's record: "Unemployment rate after Bill Clinton's third year, 5.6%. Unemployment rate after G.W. Bush's third year, 5.6%." True, but isn't it gutsy to say this seeing as the unemployment rate was about 4 percent when Bush was elected (therefore it rose 1.6 percentage points to 5.6 percent) and was 7.5 percent when Clinton was elected (therefore it fell almost 2 percentage points to 5.6 percent)?

Here's another quote from the ad: "US Economic Growth: 'Strongest in Nearly 20 years' (CNN, October, 2003)." This sounds impressive, and it is -- for the one-quarter of growth last summer to which CNN, in late October, was referring! Somehow overlooked is the fact that the economy has grown more slowly (3.5-percent annual rate) in the first 11 quarters of this expansion than in those of the prior eight expansions (5.7-percent annual rate).

Another part of the ad makes it seem as if poverty has been reduced by the current administration: "Poverty in Clinton's years, 10.5%; Poverty in G.W. Bush's years, 9.5%." You would never know that the poverty rate was 8.7 percent in Clinton's last year (2000) and rose to 9.6 percent in 2002 (the latest year of available data). In contrast, poverty was 11.9 percent in 1992 when Clinton was first elected and fell to 8.7 percent, a drop of more than 2 percentage points.

Wow, how did Bush and Co. turn a falling poverty rate from 1992 to 2000 and a rising poverty rate thereafter into a claim that suggests the administration reduced poverty while Clinton policies raised poverty? The mathematical trick, of course, is that the numbers in the ad are averages for the whole period, so the higher poverty at the beginning of the first Clinton term raises the average for him while the low poverty rate that Bush inherited lowers the average in his term.

Consider another claim from a White House "Fact Sheet": "Without the President's tax relief, by the end of last year real GDP would have been more than 3 percent lower and the unemployment rate would have been more than 1 percentage point higher, with more than 2 million fewer Americans working."

Whoops, we can't actually evaluate this claim because the Treasury Department study it is based on has never been made public. Nevertheless, this claim suggests that without the Bush tax cuts, the employment decline since early 2001 would have been 4 million, an amazingly steep and unbelievable decline.

OK, one last claim from a White House "Fact Sheet": "Job creation is accelerating, with more than 750,000 jobs created in the last seven months. Meanwhile, the unemployment rate remains below its average for the 1970s, 1980s, and 1990s."

Yes, since September 2003, 750,000 jobs have been created, or about 100,000 per month. That's not really impressive, though, by historical standards (the 1991 to 2001 expansion generated 200,000 jobs per month), and it represents 40,000 to 50,000 fewer jobs per month than we need to absorb a growing workforce. This record is especially weak given that, in April 2003, the president promised 306,000 new jobs each month starting in July 2003 if his tax cuts were passed. The economy has met this standard in only one of the nine months since then and, so far, is 2 million jobs short of the president's promise. (By the way, the Council of Economic Advisers projected again this past February that the economy would create 300,000 per month, so the administration's expectations have clearly been greater than its achievements.)

Comparing the current unemployment rate to the average of the last three decades is not quite appropriate, as the unemployment rate over the prior decades averages steep recessionary years (9.7 percent in 1982, 7.5 percent in 1992) and nonrecessionary years. Again, the relevant fact is that unemployment is up from the 4-percent rate in 2000; that's what matters. When the "missing labor force" (those who left or never entered the labor market because of a lack of jobs) is added to assess the true slack in the current economy, the unemployment rate jumps to 7.4 percent.

This shameless degree of economic spin may well backfire on the president because it counts on people ignoring the evidence of their own pocketbooks. Polling data reveal that many working families remain anxious about the economy, and politicians who tell them otherwise are at risk of appearing out of touch.

Like father, like son?

Lawrence Mishel is the president of the Economic Policy Institute (EPI). He and Jared Bernstein, a senior economist at the EPI, write a biweekly column on economic issues for the Prospect's online edition.

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